Mexican energy regulator suspends activity citing COVID-19 concerns

Mexico’s energy regulator CRE has indefinitely suspended its schedule and legal terms for ongoing procedures as the government considers integrating the agency into energy ministry Sener, ending its autonomy.

According to an agreement published Monday in Mexico’s official gazette, CRE will not resume regular activities until health authorities say the number of coronavirus cases in Mexico City has been sharply reduced.

“Those actions, requirements, requests or promotions conducted before CRE during the aforementioned period will be deemed properly conducted” until federal or regional authorities do so, the agreement said.

During a previous, similarly worded suspension active between March 24 and August 17, CRE employees remained on duty and carried out procedures, according to law firm Mayer Brown. Nevertheless, the regulator’s activities have slowed since the pandemic began.

The agreement also instructed CRE executive secretary Miguel Ángel Rincón Velázquez to set dates and times in which regulators can “deliberate on matters they consider necessary,” according to the document.

CRE exempted actions related to basic services that are necessary for the continued operation of the regulator.

Potential legal changes are underway for CRE as the government prepares actions to end the autonomy of the country’s independent bodies either by decree or by law, depending on the agency’s legal requirements. This would fold several agencies into existing ministries.

Through the move which looks to help define the government’s legislative strategy for 2021, officials aim to reduce the scope and budget of regulators they deem unnecessary.

In the energy sector, so far discussion has focused on CRE instead of hydrocarbons commission CNH. CRE could become a body that would provide technical advice to Sener and state-owned players CFE and Pemex, according to several observers.

The agency’s activities have been disrupted both by the government’s intervention and the COVID-19 pandemic, with the permitting process slowing down to a crawl throughout 2020, as BNamericas has reported previously. Meanwhile, CNH has continued to operate normally despite the pandemic.

CRE is regulating the electric power, oil refined products and natural gas industries, issuing technical requirements, reviewing and approving projects and overseeing competition in those segments.

Under the administration of President Andrés Manuel López Obrador, the agency has been pressured to stop issuing permits for private players and prioritize requests by Pemex and CFE.

Last Friday, US officials including secretary of state Mike Pompeo, energy secretary Dan Broulliette and commerce secretary Wilbur Ross said in a letter to Mexican energy authorities that the actions regarding electric power regulation risked breaching stipulations of the USMCA trade agreement.

In response, energy minister Rocío Nahle said the agreement specified it would respect each signature country’s constitutional norms when it came to the energy sector. She added Mexico was only seeking to safeguard its “energy balance” in a bid to protect users.

Government officials have long said renewable energy sources threaten Mexico’s energy security, as the national system cannot cope with their variability. Sener, CRE and grid control center Cenace have tried to enact a series of policies aimed at limiting the ability of new renewable projects to connect to the national system, although most of these policies have been blocked by federal courts.